Crypto will beat Wall Street
The financial press is again writing crypto’s obituary as a libertarian pipe dream. The Wall Street Journal’s Greg Ip offers as the latest proof, Bitcoin’s recent price drop, stablecoin TerraUSD’s crash, and crypto’s failure to revolutionize finance 13 years in. Mr. Ip then contrasts these failures with the supposed investor protections laden in the 1933 Act registration process.
Mr. Ip’s argument fails both logically and factually.
He first conflates Bitcoin and TerraUSD, as part of the crypto market that has fallen 56 percent since November. Bitcoin is a hackproof digital asset and payment settlement layer secured by 144 TWh of energy, slightly less than Egypt’s annual energy consumption. Together with side chain and above chain applications like Lightning, Liquid, RSK, and Stacks it can settle millions of payments in a single transaction block. TerraUSD was the 2018 brainchild of an ambitious entrepreneur with a flawed product that could not withstand market downturns. That some of the biggest names in crypto venture capital bought in, shows the human penchant for hype and slick marketing over technical capability.
Wall Street’s crypto predictions contain fallacies
In the long run, crypto will beat Wall Street. Mr. Ip’s reasoning that Bitcoin’s price drop shows the dollar’s strength is inverted. The U.S. government’s money-printing spree boosted Bitcoin’s price along with every other financial instrument in the past few years. Bitcoin may be first but stocks are next. The current four-month drop is the worst since 1939. It will get worse.
Finally, Mr. Ip mocks crypto’s supposed failure to eliminate financial middlemen and offer cheaper alternatives to the masses surmising 13 years is enough to prove its failure. But unless you were privy to obscure computer science list servs at the turn of last decade this isn’t quite right. In fact, Decentralized Finance (DeFi) that allows permissionless, trustless, trading, borrowing, and lending only began in 2018 San Francisco Meetup. Perhaps a little more time is warranted.
By Jossey PLLC